2014 Forecast: Gamification and the Year Ahead in Banking

While U.S. banks have been slow to adopt gamification, a whole market is set to grow around the concept that will change customer expectations for user experiences.

Few banks, particularly in the U.S., have begun using gamification in their digital interactions with customers, but globally the concept is gaining ground, according to a study on innovation and gamification in banking by Infosys . The study surveyed 160 banks around the world, and while only 9% of them had implemented some form of gamification, another 35% said they have plans in the next two years to adopt gamification.

"Banks are starting to see gamification as a path to online innovation," says Rajashekhara Maiya, associate vice president and principal of Finacle Product Strategy at Infosys. "Right now the foremost barrier [to the adoption of gamification for banks is their legacy IT systems, which are preventing any innovation. They don't have the necessary technical abilities or scalability."

But some banks are leveraging partnerships with small startups and IT companies to address this challenge, according to Maiya, and are experimenting with some interesting use cases.

For instance, Hana Bank in South Korea, which won a BAI award for innovation this year, gamified elements of its online and mobile statements so customers could play with their spending categories and get more detailed information, Maiya shares.

Another bank in Singapore put more than 150 screens in two of their branches that customers can use to design their own personalized credit card, Maiya adds. The bank also introduced a savings account that parents share with their children and includes online games that kids can play to learn about personal financial management. The children earn points through the game that can be donated to a charity.

Most of the interest in gamification from banks is being driven by the perceived threat of new non-bank entities entering the market, Maiya notes. The Infosys study asked banks what they consider their biggest threat going forward, and disintermediation of customers to new startups averaged a 3.8 on a scale of 7 among the respondents, with telcos and internet comapnies like Google perceived as an even greater threat.

"Banks are trying to build back trust and confidence with their customers. They can use gamification to spread awareness and financial education to their customers," Maiya explains. "The banks want to get in on this for customer retention."

U.S. institutions, however, seem less interested in the concept of gamification than banks in other parts of the world.

"While the rest of the world, specifically Sout East Asia, is investing in gamification… we have yet to see the investments form banks on gamification in the North American market, barring one or two exceptions," Maiya says/

Oneof those exceptions is Grow Financial, a credit union in Tampa Bay, Florida that installed a game console outside one of its branches in an attempt to gain more foot traffic at the branch. Customers and pedestrians passing by can play games on the console that teach them about the credit union's products and helps spread awareness about its offerings.

In the not-so-distant future a whole market will emerge in the technology sector around gamification, with increased spending from the providers of gamification capabilities on developers, Maiya predicts.

"This won't just be limited to banks. The telcos are going to get in on this, and will invest in expanding their bandwidth to support gamification. Handset providers will enable new user experiences based on gamification. And banks will find ways to extend gamification to real accounts and transactions. Everybody stands to make a good amount of money in this," he explains.

With that prospect it might be hard for U.S. banks to sit on the sideline for much longer and delay experimenting with this growing concept.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

I've seen a couple of examples of gamification efforts by banks where customers earn points for activities and actually compete against each other. For instance, the bank posted the highest point totals on its website. But I agree that starups and tech companies will lead the way on this, but banks should make an effort to be fast followers.

You all have a lot of faith in the banks themselves. I'm 99% certain that the gamification engagement layer will be created and owned by some savvy startup(s). The few banks that are doing anything seem to only be creating gamification implementations in order to simply say they are doing something in the face of massive threats from Google, Apple and the telcos. For instance, just about all of the gamification examples involve customers playing by themselves when the most engaging games always involve playing with other people.

You're right that gamification can create deeper consumer relationships. It will be interesting to see how banks revive their engagement platforms over the next year and how they separate themselves from today's virtual currency platforms.

From domain perspective, Banks have perfect scenarios where Gamification can do what it does best - create more engagement of the prospects and clients with the bank matters. Overtime, modern generations of the customers are getting distanced from the core understanding of the banking institutions. Gamification - starting with quick-win meaningful games but not resting there, going on to more deeper Gamification engagement solutions will bring freshness and revived interest in the customers. And yes, real fun will begin when Gamification engagement platforms will deeply hook onto the real-time client behavior and entrench seriously into real-world interfaces like cash deposits, purchasing, investments etc.

In today's world where newer forms of currencies like Bitcoin and other virtual currency platforms are becoming acceptable form of day-to-day transaction, banks need to rediscover themselves in terms of their relevance and value propositions for the customers of tomorrow. It will be interesting to see how the new face of the banking will evolve based on modern mantra of 'internet of things'.